's cover story, an investigation accuses the gop presidential candidate of banking on a bailout of the auto industry. plus, does a "normal" unemployment rate exist? two traders will duke it out in traders unplugged. superstorm sandy gave life to a new set of scams. find out how to protect yourself. and, why the creator of star wars is giving "new hope" to education. first business starts now. you're watching first business: financial news, analysis, and today's investment ideas. good morning everybody. i'm angela miles. it's november 2nd, and it's jobs friday. it may or may not be deal-breaker for voters, but tensions are high over the jobs numbers due out

today. it's anticipated 125,000 jobs were added in october, and the unemployment rate edged up to 7.9% from 7.8%. in the latest numbers on jobs, adp reports 158,000 jobs were added to payrolls last month, while the goverment reports claims for unemployment benefits last week fell by 9,000 to 363,000. stocks surged ahead of today's jobs numbers. the dow rallied 137 points, the nasdaq up 43, and the s&p popped 16 pts. gold dropped $4 and oil inched up to nearly $87. tim mulholland of china america capital joins us now from the trading floor of cme group. good morning, good to have you on the show this morning on this jobs friday. > > good to be here. > > what do you anticipate as far as the numbers? > > looking at the adp report wednesday and yesterday's

jobless claims report, expectations are probably on the high side. my expectation, for whatever it's worth, and i really don't think it's worth that much no matter what comes out, but 140,000. as long as we're north of 120,000, 140,000, i think it will be ok. the key is going to be the unemployment rate itself, which eyes will be focused on given the sharp drop it had at last month, and it's expected to uptick one or two basis points to 7.8%, 7.9%. so i think that's going to be real key to watch as well. > > and it turns out that consumers are confident. consumer confidence coming in at a four-year high. what do you make of that? > > i think that consumer confidence really goes with the market itself. granted that we have avoided a summer in which things could have turned very bad, and now i think we're looking at a stronger market. you're seeing, maybe

psychologically some things occurring that are helping. but again, we have this election coming up next week and this so-called fiscal cliff. the earnings reports really haven't been that good either. so far investors are appearing willing to look beyond that and into further growth. but again, these sentiments can change, as we've seen, very quickly. > > we can always count on you for an update on china. what's the latest? > > well, china's nationwide purchasing manager report came in better-than-expected, so that reinforced ideas thañañañañañaññ of labor unions and good government organizations say mitt romney and his family made millions from investments as a result of the auto bailout but did not reveal the windfall in his june 1st, 2012 financial disclosure report to the office of government ethics. uaw president bob king says mitt romney and his family personally profited by at least $15.3 million from the 2009 auto bailout, yet did not disclose that in financial statements to run for president. "the public needs to know how much mitt romney bet against the american worker with his investment."

at an auto workers' union hall in toledo, ohio, king and investigative journalist greg palast described ann and mitt romney's involvement in a hedge fund that purchased delphi automotive, a key supplier of parts to general motors, and how delphi's new owners got rid of 25,000 workers, dumped pensions and leveraged more than $12 billion in rescue funds by threatening to withold key auto parts from reaching gm's assembly line. "the hedge fund held up steering columns and other things that had gm not gotten them, they would've gone under. chrysler as well." "they were literally willing to risk the survival of gm to make as much money as they could." steven rattner, former counselor to the treasury during the bailout period, called it "extortion demands by barbary pirates." palast says delphi relocated parts plants in china and emerged from bankruptcy, going public last year. the

company, purchased by the romneys' hedge fund at 67 cents per share in 2009, sold for $22 a share at the ipo - a 3,000% profit for investors like the romneys. a return largely the result of the auto bailout that romney so publically opposes. "it further solidifies the democrats' and labor's picture of romney as out-of-touch and more interested in personal wealth creation than job creation." with the presidential election less than a week away, the coalition of union and good government groups is urging the office of government ethics to act now to ensure mitt romney is in full compliance with the law's disclosure requirements. our repeated attempts for a reponse from the romney campaign have so far not been met. superstorm sandy failed to knock down car sales. u.s. automakers are riding high

following a selling spree in october. chrysler sales jumped 10%. gm posted its highest october sales since 2007, with deliveries up 5%. ford sales inched up just .4%. the company reports truck sales stalled slightly while car sales, especially for fuel-efficient models, picked up. ford's ceo, alan mulally, told reporters yesterday he intends to stay on until 2014. mark fields companies turnaround will soon bump up to coo. in overseas action, toyota sales bounced 16% higher, while volkswagon's were up 22%, making it the best october since 1972. meanwhile, small businesses are still reeling from the effects of superstorm sandy. sandy shut down and damaged many businesses in its trail. now a lifeline for business owners could come in the form of disaster assistance. chris hurn of mercantile capital says for small business owners affected by the storm, loans could be a

chance to reboot business. "one of the things that is going to come out of a life- altering event like this is a lot of them are going to get insurance proceeds, and i'm a big advocate of people using those proceeds to maybe spur some action that they might not have taken before." hurn notes that disaster loans could provide owners who rent an opportunity to buy property and make other adjustments to businesses that require capital. companies and nonprofits can also apply for loans that will help replace money for lost business due to the superstorm. company owners can find more information on the small business association's website, sba.gov. the fbi, irs and better business bureau are already warning residents on the east coast to beware of scams, including crooked contractors offering to repair homes or clean debris from yards. also, fake charities are popping up on the

internet using phony names similar to reputable organizations. "if you want donate to a charity, go to the charity directly, don't follow an email lead, because those emails have viruses in them." that was steve bernas of the better business bureau. fraud was so rampant in the wake of hurricane katrina in 2005 the government created a disaster fraud team which is said to have prosecuted nearly 1,500 people involved with running scams related to katrina and rita. meanwhile, countless americans are opening their wallets to victims of the superstorm. about $11.4 million so far has been donated to the red cross, two days after the storm. that's more than the $8 million donated after hurricane isaac. a music telethon dedicated to sandy and led by bruce springsteen, bon jovi and billy joel will air on nbc tonight. climate change failed to become a major headline story in the presidential election... until now. in the aftermath of hurricane sandy, new york mayor

michael bloomberg noted the summer drought, melting ice caps and rising temputures as reasons to take action on climate change. then on thursday in a stunning move, bloomberg endorsed president obama, citing his record on climate change issues such as raising fuel emissions standards. meanwhile, gop vice presidential candidate paul ryan suggests taking another route. his idea is to drill for oil in the arctic, then invest the profits in renewable energy. consumers proved to be in a spending mood this october. the international council of shopping centers says retailers are reporting modest gains for the month. costco was one of those stores, with sales rising 7% from the same time last year. macy's' same-store sales popped 4.1%, while target saw a smaller increase of 2.4% - lower than analyst expectations. however, superstorm sandy remains a concern going forward. analysts think some consumers along the east coat may have spent extra preparing for sandy and that it could have an impact

on christmas spending. retailers hope the spending trend continues into the holiday shopping season. big retailers such as best buy, macy's, kohl's and walmart all open bright and early at 12 am on black friday. kmart opens at 5 am and toys 'r' us at 9 am. and online shopping isn't left out - amazon will offer limited- time specials as part of its "black friday deals store." in corporate earnings, exxon topped earnings expectations even though profits fell 7% to $9.5 billion. the oil company blames a drop in production and falling prices at the gas pump. at avon, revenue dropped 8% to $2.5 billion. the ceo admits earnings were disappointing and improvements will take time. pringles chipped in crisp sales at kellogg, pushing the cereal

maker's revenues up 12% to $3.7 billion. and, pfizer's revenue plunged 16% to $13.9 billion, mostly because it was hurt by generic sales of its blockbuster cholesterol drug lipitor. following a deal with disney, george lucas is making a "star" donation. the "star wars" creator will reportedly donate the bulk of the big disney deal to education. this week disney bought the "star wars" franchise, along with lucas' production company, for 4 billion dollars. still to come, what rate is "right" when it comes to unemployment? that's later in traders unplugged. but first, we'll discuss the state of small business prior to a very important election. analysis with bill moller is next.

before the big election next week are now coming out - things like consumer confidence, jobs added by private sector employers, and the surepayroll small business scorecard for october. it just came out. michael alter is president and ceo of surepayroll. who should be smiling from your numbers - romney or obama? > > from our numbers, governor romney should definitely be smiling. we're seeing a continued deterioration of the small business economy. we're seeing month-over-month hiring continue to fall. we're seeing the average paycheck continue to fall. where we are seeing growth is in temporary or contract workers.

> > let's backfill some of the numbers. hiring: what happened there? > > hiring we saw it fall 0.1% month-over-month, and it's clearly down for the year. > > you call it the pay index, but that's essentially what small businesspeople are paying their employees. what happened there? > > the average paycheck fell 0.2%. so, the take-home pay was hurt in the month of october. > > and you had, the last time you were here, there was a trend it seemed like with more and more contractor use. is that continuing? > > it is a continued trend, and we're seeing more and more contractors on the payroll as one of the sort of relief valves given all the uncertainty about the future of the economy. > > so that means that instead of hiring more, they want to have the contractors in as sort of a buffer, because they don't know where things are going to go, and so it's easier to cut than hire. > > exactly. it's easier to cut. you don't have to pay employment taxes or the other costs that go along with hiring

a full-time employee. > > all right michael alter, notwithstanding what we have just been talking about, you did find that optimism was up. > > optimism came back up, and it came up significantly from september to october. it's now hovering around two-thirds being optimistic. the challenge is that two-thirds being optimistic is really where we have been every month in 2012 except for the month of september. so we're back to the norm for 2012 as opposed to a number like 90%, which is really where you need to see it for small businesses to be growing. > > when they're that optimistic, then they are hiring, they're expecting that orders will be coming in, and that's the kind of flourishing economy that they are looking for. > > right. to put it into perspective, small businesses are by definition glass-half- full people. they're going to be optimistic. that's why they're in business, and that's why they're taking on these bigger companies. so when optimism is 2-in-3 being optimistic about the future, that's not strong

optimism. > > there's always the unknowns, the uncertainties. one big component that had been unknown will be resolved next tuesday with the election. > > let's hope so. i think the election certainly will give some clarity to small business owners about the direction of our economy, about our fiscal and government policies, and that will allow them to play their cards in the way they think is right. whereas right now everybody is holding their cards, waiting to see what happens. > > michael alter with surepayroll. thanks so much. > > thanks for having me. the gloves are coming off. two traders dish on what's really happening in the markets. that's next in traders unplugged.

with just a few days to go to the election, traders unplugged is going heavy on the economy today. professional options trader alan knuckman and oil trader phil flynn, who is also

with fox business news where he contributes, are ready to weigh in. here we go guys: "spare us a quarter:" we are halfway through the quarter. what is your takeaway on the numbers? > > i'm going to remain optimistic. in the price action we're only 3.5% off of the multi-year highs. we weren't expecting much for this quarter. we came in with earnings growth of about 1% when we were actually expecting negative earnings growth. that's a positive. > > it's not positive if you want to get reelected, i'll tell you that. the numbers aren't that good. but we did see a big tick-up in consumer confidence. you know why? probably because gasoline prices went down. > > round 2: fracking friction - the government has spent billions on research that has unlocked natural gas right here in our own country- good idea or bad? > > great idea! what are you talking about? but why does the government get credit for spending money? george mitchell is the guy that figured out the

fracking and the directional drilling. the government always tries to take credit for what the private sector does- > > 1975, the department of energy funded the research. the tax credits of over $100 billion have helped. so it's a consortium, working together. and actually, what this is going to do, the next phase is going to be in oil, because they're going to apply the same technologies to natural gas. it's a win-win for everybody- > > give me a fracking break. the bottom line is- > > they didn't want to invest the time and the money, but they got the tax credits, so they said, "okay, let's keep doing it." > > round 3: what is the new normal for unemployment? will the rate ever drop below 6% again? > > i did a little research on ageism, because i wanted to talk to you, and what we're seeing is that the rates right now of participation have declined from 68 million down to 64 million in the last decade or so, mainly because people are retiring and leaving the workforce. so that is going to help out the unemployment numbers. but i know people are concerned, and right now we have seen 30 straight months of

private-sector employment growth. > > i agree with alan but for a totally different reason. the bottom line is, when you get into a situation where unemployment is high- and people used to tell us in the '70s that 10% was the norm, that we'd never get- > > don't go there. now you're going to use 6%? which number are you going to use? is it 7.8% or no? do you believe in the number or no? > > i believe in the number, but the number that i want to talk about is that when we start telling the american people that you are going to have a certain amount of unemployment no matter what, i don't buy that. > > nobody has ever said that- > > i have to move on. we're running out of time. let's move on to the bonus round: since it is an election year, guess the average net worth of a u.s. congressman. is it $500,000, $2 million, or $5 million? > > $500,000. > > i'm going to say $2 million, because a lot of those guys have been around a long time- > > senators it's much higher. [buzzer > > it's $5 million. [aw! > > got it wrong. goodbye. stay tuned to first business. just ahead, stocks that are breaking out in the wake of superstorm sandy.

a couple of charts are looking more interesting in the wake of hurricane sandy. right now scott bauer of trading advantage joins us on this friday. good morning to you scott. > > hi angie. how are you? > > i'm great. armstrong worldwide though is showing some promise here for investors. > > you know, you look at this space out there, and everybody was really focused in on like home depot and lowes. but look at the overall construction space. there's really two stocks: awi, like you just said, boy did this thing really get a pop. it's blown through any sort of resistance area just because of the outlook, really because of sandy. the stock is up trading around $53, $53.50. option volatility is actually very low, so you know, you can really get in this space pretty inexpensively. but at this point, it doesn't look like there's going to be any kind of pullback anytime soon. > > another stock that popped yesterday was usg.

> > yes. kind of really the same story. same space, definitely not as widely held or widely, let's call it, played in the markets as a home depot or a lowes. but same thing: the outlook because of sandy, going into not only fourth quarter, but first, second quarter of next year, is going to be very rosy. same thing, we breached all resistance levels - the stock is trading $27.50, and volatility is low. so again, it could be a very good, cheap play to the upside. > > usg actually had a 52-week high yesterday in trading. > > yup. > > good to have you on the show. have a good weekend scott. > > same to you angie. that's all the time we have for today. a quick reminder to set your clocks back on sunday so you don't miss our show monday. join us then as we compare the economic policies of the candidates ahead of tuesday's presidential election. from all of us at first business, have a great weekend!

we're live in san francisco where san francisco police have just released a surveillance video ever a man brutally attacking a muni agent. what sparked the confrontation and why police need your help. the neighborhood effort to track down a pair of thieves seen stealing people's mail in solano county. the key report due out in one hour that could give a big push to one of the candidates ahead of tuesday's presidential election. it's all ahead on the ktvu channel 2 morning news.

good morning, thank you for joining us it is friday november 2nd i'm pam cook. >> and i'm brian flores. and hopefully there won't be any rain in the forecast. steve, what do you think? >> no, i think we took care of that. halloween night. we do have chilly lows though out there. temperatures have really dropped compared to 24 hours ago. there are some 40s out there. a lot of high clouds taking aim toward the north bay. overall today expect for the north bay we have mostly sunny skies. highs 60s and low 70s. here is sal. steve, good morning to you. right now traffic is moving along pretty well around the bay area as we look at some of the pictures. highway 4 off to a great start coming up to the will low pass grade. it is a nice looking deprive with no major problems. alsos morning commute looks good on interstate 880 in oakland. it's 4:29 let's go back to the desk. topping our news this morning a san francisco muni employee has not been able to return to work for nearly a month after a brutal beating in